I tested it out with a USB-C charger, a power meter tester, and one of these docks that I bought about a year ago. It does work, but fast charging (power delivery) is not enabled when going through the dock.

I use my iPhone 6+ on my desk a lot and sometimes want a private call with headphones rather than through the mac. As i am thinking of upgrading to iPhone 7+, does this allow iPhone 7 to charge and also plug in headphones for making phone calls?

When you have headphones connected tothe jack on the back of the dock, it works the same as your headphones will work when they're connected to the phone directly. All audio, music, calls, podcasts, etc, will still go to the headphones and still can be controlled with the volume buttons.